Money‚ Markets & Macroeconomics

Europe’s shrinking stash heralds economic trouble

14 Nov 2023

Euro zone households and companies have hoarded money since 2008 and now hold financial assets worth 63 trln euros. That cushioned the blow of higher interest rates and helped stave off a recession. But as mortgages and debts come due, growth may take a hit in 2024.

China’s Singles Day shows buyers’ commitment issue

13 Nov 2023

The country’s biggest shopping event recorded meagre growth of around 2% in total volumes despite steep discounts. E-commerce giant Alibaba didn’t provide figures again, a sign of slow sales. Beijing needs consumers to power growth but shoppers look fatigued.

Japan has become a gold mine for value investors

10 Nov 2023

Japanese stocks delivered negative returns for decades. Low debt, a cheap currency and a shift in corporate power to shareholders – egged on by the authorities – are changing the dynamic. The stock market’s recent strong run could last for years.

 

Social Security collides with idle golden years

9 Nov 2023

Republican presidential candidates pitched a handful of ideas for saving the US benefit, like a higher retirement age. But potential solutions can’t dent the real issues: an aging population and massive, broad overspending.

Biden’s economic scorecard touts fragile advantage

9 Nov 2023

Low unemployment and easing inflation should aid the US president’s reelection push. Yet most Americans aren’t impressed, and rising borrowing costs don’t help. A Breakingviews tally gives Biden a narrow economic lead over Republicans. The next 12 months will test that advantage.

Ping An highlights China property and policy risks

9 Nov 2023

Beijing wants to broker a bailout of troubled developer Country Garden by the $100 bln insurer, Reuters reported. Ping An denies it has been asked. Yet it’s a warning that, as local governments try to defuse debt bombs, even large private companies may face pressure to help.

Hong Kong finance summit tiptoes around China

9 Nov 2023

Executives from Apollo’s Marc Rowan to UBS’s Colm Kelleher gathered in the Asian city to debate markets, debt and regulation. Yet few mentioned slow growth and slumping real estate across the border. For firms straddling the geopolitical divide, some topics are best avoided.

India’s gamified equities are a wake-up call

8 Nov 2023

Retail investors are driving derivative volumes to far higher ratios than in the US. Yet 90% of these speculators lose money. The activity is tough to regulate and it spotlights hidden risks of lightning-speed digitally enabled financial inclusion.

Workers are missing cog in US manufacturing gears

7 Nov 2023

Government subsidies have sparked a construction bonanza, with spending on microchip, EV and other factories running at an annualized pace of $200 bln, 60% more than a year ago. Buying the needed equipment comes next. Filling all the new jobs, however, will be the hardest part.

Vans owner VF is due a wardrobe refresh

6 Nov 2023

The $6 bln apparel empire’s debt soared as shares sank 40% under its ex-CEO, whose costly deal for Supreme ran counter to its modus operandi. New boss Bracken Darrell’s cost-cutting plan has promise. Selling the streetwear brand and investing in known hits is the best next step.

Chinese firms are reluctant national team players

6 Nov 2023

Regulators are rallying domestic investors to help prop up the country’s frail stock market. More than 1,100 companies led by battery giant CATL have responded by spending $9 bln buying back shares. Yet that’s only a tepid increase from 2022. Corporate support looks half-hearted.

High bond yields challenge “Pax Americana”

6 Nov 2023

The end of free money is adding to US political dysfunction. This may undermine the country’s ability to meet multiple global challenges: witness the struggle in Congress over military aid for Ukraine. The only consolation is that China has even bigger debt problems.

 

Rich countries are stumbling into a debt trap

3 Nov 2023

Large deficits and higher interest rates are pushing up the cost of servicing hefty piles of sovereign borrowing. Elusive growth, stubborn spending and hawkish central banks make it hard for governments to regain control. Little wonder bond investors are heading for the exit.

Japan’s rates tweak is careful and crafty

2 Nov 2023

The central bank changed its policy to allow higher 10-year bond yields. Unlike the US, it can afford to raise borrowing costs slowly as inflation is low. In this Viewsroom podcast, Breakingviews columnists explain why monetary tightening as others loosen may give Tokyo an edge.

Broker disruption can grow beyond housing

1 Nov 2023

A $1.8 bln verdict against real estate agents could cut into commissions and deflate sky-high home prices. Industries with similar middlemen were already disrupted. Residential brokers are due for a reckoning. Others, like investment banking, could use dismantling, too.

Treasury’s borrowing boom is gust before the storm

1 Nov 2023

Between the Federal Reserve’s interest-rate pause and the US government’s $112 bln borrowing splurge, there’s plenty to drive yields higher. But the reason Treasury markets are so susceptible to turbulence is the bigger problem: too much debt, and no plan to get it down.

BoE’s tough talk on rates ignores weak homeowners

1 Nov 2023

The Bank of England is set to keep borrowing costs steady this week but insist they will stay high to curb inflation. That may be hard, given the sick housing market has yet to feel the pain of past hikes. The UK may ease policy sooner than its peers will, and the market expects.

China rate scare reminds watchdogs of hidden risks

1 Nov 2023

A liquidity squeeze spooked the country’s money market just as top regulators completed a twice-a-decade summit to outline Beijing’s financial plan. Overnight rates as high as 50% may prompt more monetary loosening. Yet local government debt problems require more drastic surgery.

Israel’s war is a risk and opportunity for Saudi

31 Oct 2023

Hamas’s attacks complicate Mohammed bin Salman’s aim to build relations with the Israeli state, Gulf expert Kristian Coates Ulrichsen says in this Exchange podcast. But if the Saudi crown prince can use his leverage to help Palestinians, it may help his image at home and abroad.

Big government will drive the next market cycle

31 Oct 2023

Politicians are at their most interventionist in decades. Though a return to the stagnant, centralised economies of the 1970s is unlikely, subsidies and inflation will influence asset values. Fund managers need to pick investments that may benefit from the state’s visible hand.